The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:

	Total			Dirt Bikes			Mountain Bikes			Racing Bikes
Sales	$	926,000		$	263,000		$	404,000		$	259,000
Variable manufacturing and selling expenses		463,000			110,000			202,000			151,000
Contribution margin		463,000			153,000			202,000			108,000
Fixed expenses:
Advertising, traceable		69,000			8,400			40,100			20,500
Depreciation of special equipment		43,400			20,300			7,900			15,200
Salaries of product-line managers		116,000			40,900			38,800			36,300
Allocated common fixed expenses*		185,200			52,600			80,800			51,800
Total fixed expenses		413,600			122,200			167,600			123,800
Net operating income (loss)	$	49,400		$	30,800		$	34,400		$	(15,800)

*Allocated on the basis of sales dollars.

Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out.

Required:

1. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?

2. Should the production and sale of racing bikes be discontinued?

3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines.